DSM Acquisition of Roche Vitamins a Rumor 32821

DSM Acquisition of Roche Vitamins a Rumor

BASEL, Switzerland--The rumor mill was given a good push whenthe German newspaper Badische Zeitung reported in late May thatSwitzerland-based Roche Holding AG would sell its vitamins and fine chemicalsdivision to the Netherlands-based group DSM N.V. However, sources at theU.S.-based Roche division told INSIDER this is only a rumor, and that thecompany is still exploring its options.

In February 2002, Roche A.G. announced it was reviewing strategic optionsoutside of the company for its vitamins and fine chemicals division. It was theonly Roche business to post a decrease in operating profit margin for fiscal2001, falling 3.9 percent. In addition, the division was suffering from heavyfines paid in anti-trust suits that began in the early '90s. Most recently, theEuropean Commission fined Roche Vitamins and Fine Chemicals 778 million Swissfrancs (US$455 million) for taking part in an international vitamin price-fixingscheme, which included other companies such as BASF and Eisai Co. As aprecautionary measure, Roche put aside an additional 760 million Swiss francs(US$444 million) for lawsuits still pending in the United States.

To date, Roche (www.roche-vitamins.com)reported it has three options: to spin off as a separate company, to be acquiredby someone or to have the division's assets purchased by an investment bank. InFebruary, Roche told INSIDER that if an outside corporation bought thedivision, it would likely be someone with similar interests and a comparablecustomer base, and possibly someone active in the fine chemicals area.

According to a U.S. Roche source, the division heard about the announcementwhen the news crossed the Atlantic and hit American newspapers. Outlets such asReuters and Dow Jones Business News picked up the story, with Reuters quoting aDSM spokesperson as saying that although DSM wants to grow its life sciences andspecialty chemicals channels via acquisitions, the company had nothing to reporton that front at the moment.

DSM could well be a possible candidate to acquire this Roche division, thesource told INSIDER; however, so are several other companies. Accordingto Dow Jones, analysts covering DSM have reported that companies such asGermany-based Degussa AG and Denmark-based Christian Hansen Holding A/S areother companies DSM may possibly take over.